Poor Infrastructure Slowing FDI

Poor infrastructure affects the productivity of the economy as a whole and hence its GDP/per capita GDP. It also reduces the comparative advantage of industries that are more intensive in the use of such infrastructure. In the context of FDI, poor infrastructure has a greater effect on export production than on production for the domestic market. FDI directed at the domestic market suffers the same handicap and additional costs as domestic manufacturers those are competing for the domestic market. Inadequate and poor quality roads, railroads and ports, however raise export costs vis-à-vis global competitors having better quality and lower cost infrastructure. As a foreign direct investor planning to set up an export base in developing/emerging economies has the option of choosing between India and other locations with betterinfrastructure, India is handicapped in attracting export oriented FDI